Comprehensive Problem 7-1

Sherry Hopson owns a retail family clothing store. Her store is located at 4321 Heather Drive, Henderson, NV 89002. Her employer identification number is 95-1234321 and her Social Security number is 123-45-6789. Sherry keeps her books on an accrual basis.

Form 4562 Question

I need help figuring out

Part III MACRS Depreciation (Don't include listed property.) (See instructions.)

Section A17MACRS deductions for assets placed in service in tax years beginning before 2017 . . . . . . . . . . . .$????

Form 1040 (Schedule C) Question

I need help figuring out

13) Depreciation and section 179 expense deduction (not included in Part III) (see instructions) . . .$????

Gross sales $351,700Returns and allowances 4,000Expenses:Beginning inventory (at cost) $ 84,300Add: purchases 100,700Cost of goods available for sale 185,000Less: ending inventory (at cost) 75,000Cost of goods sold $110,000Rent 23,800Insurance 1,500Legal and accounting fees 2,800Payroll 37,200Payroll taxes 3,440Utilities 1,850Office supplies 750Advertising 2,100 Eherry's bookkeeper has provided the booksbasis fixed asset roll forward to be used In computing the depreciation. The tax lives of the assets arethe same as the book lives shown In the fixed asset schedule. The truck Is not considered a passenger automobile for purposes of the luxury automobile limitations. N0 Section 179 election is made. For tax purposes, Sherry elected out of bonus depreciation In all years except 2017. Hupson RetailFixed Asset Rullforward 12/ 31/ 20 17 (book basis)DEPR COST 2015 2016 2017 ACCUM NET BOOK ASSET IN SERVICE METHOD E m w m w w M mSH REGISTER 2/15/2015 SL 5 9,800.00 1,796.67 1,960.00 1,960.00 5,716.67 4,D83.332015 TOTAL ADDITIONS 9,800.00 1,796.67 1,960.00 1,960.00 5,716.67 4,083.33REI'AIL FIXTURES 10/12/2016 SL 7 4,500.00 160.71 642.86 803.57 3,696.43FURNITURE 10/12/2016 SL 7 3,600.00 128.57 514.29 642.86 2,957.142016 TOTAL ADDITIONS 8,100.00 - 289.20 1,157.15 1,446.43 6,653.57TOTAL 17,900.00 1,796.67 2,249.28 3,117.15 7,163.10 10,736.90DELIVERY TRUCK 6/1/2017 SL 5 32,D00.00 3,733.33 3,733.33 28,266.67DESK AND CABINETRY 6/1/2017 SL 7 17,D00.00 1,416.67 1,416.67 15,583.33COMPUTER 6/1/2017 SL 5 3,500.00 408.33 408.33 3,D91.672017 TOTAL ADDITIONS 52,500.00 7 , 5,558.33 5,558.33 46,941.67TOTAL 70,400.00 1,796.67 2,249.28 8,675.48 12,721.43 57,678.57 Special Depreciation Allowance and Other Depreciation (Don't include listed property.) (See instructions.) 14 Special depreciation allowance for quali?ed property (other than listed property) placed in sewice during the tax year (see Instructions) ........... 1.415 Property subject to section 168(f)(1) election ......................................... 1516 Other depreciation (including ACRE) .................................................. 16 Part III MACRS Depreciation (Don't include listed property.) (See instructions.) Section A 17 MACRS deductions for assets placed in service in tax years beginning before 2017 ............ 17 18 If you are electing to group any assets placed in service during the tax year Into one or more general asset accounts, check here ............................................................... D [I 3 Advertising ............. 8 v' 13 Office expense (see instructions) . . . . 19 9 Car and truck expenses (see 19 Pension and profitnsharing plans . . . . 19instructions) ............ 9 20 Rent or lease (see instructions): ..... - —10 Commissions and fees. . . . 10 a Vehicles, machinery, and equipment 20a11 Contract labor (see instructions) 11 b Other business property ......... 20b12 Depletion ............. 12 21 Repairs and maintenance ......... 2113 Depreciation and section 179 22 Supplies (not included in Part III) . . . 22 expense deduction (not included 23 Taxes and licenses .............. 23 V24 Travel, meals, and entertainment: . . . - 14 Employee bene?t programs a Travel .................... 24a in Part 111) (see instructions) . . . (other than on line 19) ..... 14 h Deductible meals and 15 Insurance (other than health) . _ 15 J entertainment (see instructions) . . 24b16 Interest: .............. - 25 Utilities .................... 25 a Mortgage (paid to banks, etc.) 163 26 Wages (less employment credits) . . . . 26 b Other ................ 16b 27a Other expenses (from line 48) ..... 27a 17 Legal and professional services b Reserved for future use . . . . . . . . . 17b 28 Total expenses before expenses for business use of home. Add lines 8 through 27a ............. b 28 :l